Secure and Sustainable Pension Reform: Three million Australian pensioners benefit from reforms
Australia’s single pensioners will receive increases of up to $32.49 a week as part of the Australian Government’s Secure and Sustainable Pension Reforms.
All 3.3 million age pensioners, disability pensioners, carers, wife pensioners and veteran income support recipients will benefit from increases in their pension payments.
These reforms will improve the adequacy of the pension system, make its operation simpler, and secure its sustainability into the future.
These long overdue reforms deliver a stronger and fairer pension system.
From 20 September 2009, the Secure and Sustainable Pension Reforms deliver increases of:
- $32.49 per week for singles on the full rate; and
- $10.14 per week combined for couples on the full rate.
These increases will cost $14.2 billion over the next four years.
From 20 September 2009, total assistance for single pensioners will increase from $304.19 per week to $336.68 per week and for pensioner couples combined from $497.36 per week to $507.50 per week.
This increase brings the single rate of the pension up to two thirds of the combined couple rate.
The reforms are focused on addressing the particular inadequacy of the single pension, as highlighted by the Harmer Review of Pensions.
Single pensioners who currently receive a part pension will benefit from an increase of between $10.14 and $32.49 depending on their level of private income. Around 75 per cent of single pensioners will receive the full increase. All current pensioner couples will receive $10.14 per week combined.
The base rate of the pension will continue to benefit from benchmarking to wages. The benchmarked rate will increase for singles from 25 per cent to 27.7 per cent of Male Total Average Weekly Earnings, an increase of more than 10 per cent. The new benchmark will be enshrined in legislation.
The total increase will comprise a rise in the base rate for single pensioners and a new Pension Supplement for all pensioners.
The reforms will deliver for pensioners on the full rate:
- For singles: an increase of $30.00 a week in the base pension, and $2.49 a week in the new Pension Supplement; and
- For couples: an increase of $10.14 a week in the new Pension Supplement.
Annually, this represents a total increase in permanent payments of $1,689 for singles, and $527 for couples combined.
We recognise that pensioners are the best judge of managing their own budgets so we are merging four payments into one by introducing the simplified Pension Supplement to replace separate allowances for GST, Utilities, Telephone/Internet and Pharmaceuticals. The new Pension Supplement will initially be paid fortnightly, and from 1 July 2010, pensioners will be able to choose to receive around half of the new Supplement on a quarterly basis.
The two-thirds ratio between singles and couples will apply across both the base pension and the new Pension Supplement.
These reforms give pensioners more financial security and flexibility in how they receive their payments. The reforms will simplify the complex maze of pensioner payments and make the system fairer and sustainable into the future.
In addition to the pension increases, the package also includes:
- New guaranteed payments to carers – a $600 annual carer supplement payable to all Carer Payment and Carer Allowance recipients;
- Reform to supplementary payments to make the pension system simpler and more flexible by merging four payments into one; and
- Improved incentives for age pensioners to do part time work, by allowing them to keep more of their earnings from employment.
Australia, like most developed countries, is facing the challenges of an ageing population. Increasing the pension is a substantial cost to the Budget bottom line that will only increase as our population ages.
To provide a strong safety net for those who rely on the pension to survive, the Government has taken necessary decisions to make sure these reforms are affordable.
Our reform package includes key measures to ensure the long term sustainability of the pension system, including:
- Measures to better target pension payments, including tightening income test rules to target the largest pension increases to those with the lowest incomes;
- Better targeting of superannuation tax concessions; and
- Reform to make the pension system sustainable in the face of the ageing of the population by increasing the age pension age from 65 in 2017 to 67 by 2023.
Through a series of tough decisions, and despite the ageing of the population, Secure and Sustainable Pension Reform will be fully offset by 2020-21.
These are the most significant reforms to the pension since it was introduced 100 years ago, and are a vital investment in preparing Australia for the future.